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EUR/USD Forecast: The Bulls Face an Uphill Climb to Parity

The EUR/USD looks set to break a 5-day losing streak occasioned by recent US Dollar strength. This Tuesday, US long-term bond yields are lower, and the USD Index is off its recent highs, allowing the EUR/USD to gain a modest 0.38% on the day. 

The recent decline started on 20 September, leading the EUR/USD to break parity. With the price now firmly below 1.0000 once more, analysts at Nordea bank remain bearish on the single currency as they have been for quite a while.

They are now calling for a 0.95 price, with a good chance of hitting 0.90 if the year-end 0.956 target is broken. This outlook comes from the energy price shocks confronting the Eurozone and their negative impact on the industrial sector. The argument is that trade will shift to countries better insulated against rising energy prices, further weakening the Euro. 

Key US fundamentals are due later Tuesday. These are the Consumer Confidence data, the US Durable Goods Orders and the speech by Fed Chair Jerome Powell at a digital currencies discussion hosted by the Bank of France. 

EUR/USD Forecast

The recent decline has completed the measured move from the rising wedge’s breakdown. This move has seen the bears break down several pivots along the way, including the recent support level at 0.96877. This was followed by a return move which is actively playing out.

The active daily candle has met resistance at this price point. This sets up a retest of the 26 September 2022 low at the 0.95746 price mark, the 61.8% Fibonacci extension of a trace from the 11 August 2022 high to the 6 September 2022 low.

Additional harvest points for the bulls below the current support include 0.93299 (10 September 2001 high) and 0.90761 (23 April and 17 December 2001 highs). There is an additional southbound target at the 0.88569 pivot where the previous low of 8 May 2000 is found. 

Conversely, an additional recovery will be on the cards if the bulls uncap the 0.96877 barrier. This scenario would see 0.98774 (6 September low) becoming the new upside target. Parity comes calling at 1.00048 if the advance continues, with 1.01174 (9 September high) forming an additional target to the north. 

EUR/USD: Daily Chart